The High Court has heard a former director of Web Summit told its CEO Paddy Cosgrave that he had broken him “as a man and a human being” through manipulation and undermining.
Details of a phone call recorded by Mr Cosgrave were outlined to the court during the third day of a major legal action involving the founders of Web Summit.
Lawyers for former director David Kelly said Mr Cosgrave appeared to “thrive on confrontation”.
In an opening statement in the case taken by Mr Kelly against Mr Cosgrave, Senior Counsel Michael Cush said the case was not about a clash of personalities but “egregious oppression”.
David Kelly, along with another former director, Daire Hickey, is suing Paddy Cosgrave for shareholder oppression and a breach of a profit share agreement. Mr Cosgrave is suing David Kelly for a breach of his duties as a director of Web Summit related to his involvement of a venture capital fund separate to Web Summit.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
The court has previously heard the cases were connected by a bitterness similar to a family law dispute.
Michael Cush SC told the court Mr Cosgrave was “an intense man, extremely hard working and undoubtedly had a talent” but was also capable of “sustained ire towards those he perceived to cross him and appeared to thrive on confrontation”.
Mr Cush said Mr Cosgrave had described himself as “having fun” during a period of intense controversy with Mr Kelly and that Mr Kelly has “suffered terribly as a result”.
He said Mr Kelly goes out of his way to avoid confrontation, beats himself up, blames himself and is very self critical. This was not a case that simply arose from a clash of personalities, according to Mr Cush, but was a case of egregious oppression.
He said Mr Cosgrave had used a five-year-old complaint of sexual harassment against former director Daire Hickey to invent accusations against Mr Kelly that he had not investigated the complaint properly and had sought to cover it up.
He said Mr Cosgrave has claimed the details of the complaint were kept from him and this was “simply not true” and there was no evidence to support his claims in later years that he had repeatedly sought a file on the case.
Yesterday, lawyers for Mr Hickey told the court that Mr Cosgrave had revived and reinvestigated the 2016 complaint against him as part of a campaign to oust him from the company and blackmail him into surrendering his minority shareholding.
The court was told that Mr Hickey strenuously denies the allegation.
The court was told today that Mr Cosgrave had suggested years later to Mr Kelly that he had not investigated the complaint properly because Mr Hickey had “kompromat” on Mr Kelly.
He said he had developed and pursued the suggestion relentlessly but it was their submission that Mr Cosgrave had invented it and never really believed it himself.
Details of texts exchanged were shown to the court where Mr Kelly questions Mr Cosgrave about what he is talking about. Mr Cosgrave goes on to suggest that Mr Hickey had visited a brothel while on a business trip to Singapore.
Mr Kelly replies saying they were taken there “by a VC” and did not know where they were going and “nothing happened whatsoever”.
He also said “everyone goes there” when visiting Singapore and that it was seven years ago. Michael Cush said the venue referred to as “Four Floors” is a nightclub complex over four floors in an office building in Singapore which is a “massive attraction”.
The court heard Mr Cosgrave had recorded a phone call with Mr Kelly, during which he accused him of withholding information about the complaint against Mr Hickey. Edited excerpts of the call were then circulated to a number of people by Mr Cosgrave, Mr Cush said.
He said Mr Kelly’s statements made during a call he did not know was being recorded were a true reflection of the facts. During the call, Mr Kelly repeatedly denied keeping information from Mr Cosgrave, said he was lying and called him a “scumbag” for bringing it up. He also accused Mr Cosgrave of manipulating him.
During the call, he said: “You’re a highly good manipulator, you undermine me, question me, you’ve broken me as a man and a human being. I cried last week.”
Mr Cush said the question for the court would be was this oppression and the answer was most certainly yes.
Earlier Mr Cush outlined how Mr Kelly and Mr Cosgrave met at boarding school and stayed loosely in touch before reconnecting in 2007. They shared a house in Adelaide Road and then Manders Terrace, after which the Web Summit company was named.
He said Mr Cosgrave held three events in Dublin which he set up on his own but in 2010 asked Mr Kelly to help with the business.
The pair would sit at their kitchen table “in what was fledgling business and everyone appreciated it was Mr Cosgrave’s idea and he was the driving force behind it and ultimately that difference was reflected in the difference in their shareholding,” Mr Cush said.
He added that it had, however, “all the hallmarks of a quasi partnership based on a long-standing friendship” and this was important to counter arguments that a buy out of a minority shareholding should be at a discounted rate.
Mr Cush said Mr Cosgrave had said as recently as 2021, with the assistance of legal advice, that it was a quasi partnership and this was “manifestly correct”.
Lawyers for David Kelly also told the court there was nothing wrong in law with him managing a second venture capital fund and there was fundamental flaw in the case against him for breach of directors duties.
Web Summit and Paddy Cosgrave claim Mr Kelly used an opportunity to set up an investment fund for his personal profit at the expense and to the detriment of the company. He is being sued for €10 million in damages.
Mr Cush said the opportunity taken up by Mr Kelly was to be a manager of a fund and this was not an opportunity available to Web Summit.
He said the second fund was set up with the full knowledge of Web Summit and there was breakdown between Mr Cosgrave and Mr Kelly and Web Summit decided not to involve itself in it.
Mr Cush said the complaint against his client was that he had “gone off to manage your own fund with some of the partners from the previous fund participating”.
He said there was nothing wrong in law with that and it was flaw at the heart of the case against his client.
The case continues tomorrow before Mr Justice Twomey at the High Court and is expected to last nine weeks.
